Smartkarma Daily Briefs

• This is a hybrid insight on the upcoming TOPIX FFW Review to be announced 7 October, and the situation around Shinsei Bank (8303 JP). 
• Shinsei Bank is in “limbo” post control-acquisition by SBI Holdings (8473 JP) and an attempt to go over 50% should be in the works. When is not known.
• The TOPIX FFW Review should see ¥2.0-2.2trln of one-way flow, and amongst that flow, a large sell on Shinsei to increase Real World Float by 60+% and 25d of ADV.

• PRC-Incorporated property management play Jinke Smart Services (9666 HK) has announced a voluntary cash offer at HK$12/share, a 33.04% premium to last close.
• The Offeror (Boyu) and concert parties collectively hold more than 50%. The Offer is contingent on regulatory approvals and 7.71% of shares out tendering. The tendering condition can be waived.
• The Offer appears geared to bring Boyu’s stake in line with Jinke Property Group (000656 CH)‘s. 

• The Swire buyback has been impressive. In 27 trading days they have bought back 26.8% of teh HK$4bn promised. In that period, participation has been aggressive.
• Swire has bought back As at a pace of 52% of pre-buyback one-year ADV. For Bs, it has been 105%. But Bs have dramatically underperformed As on “HK Re-opening” trades.
• Historically, when B/A gets more than 6% from 3mo Avg VWAP Ratio, there is statistically significant reversion. We are now at 6.8%. I’d buy B vs A.

• Jinke Smart Services (9666 HK) announced a voluntary conditional general offer from Boyu Capital at HK$12.00 per share, a 33.0% premium to the undisturbed price.
• The offer is conditional on 7.71% valid acceptances (such that Boyu represents 30.40% of outstanding shares) and anti-trust approval. The conditions can be waived.  
• The offer is designed to flush out minorities unwilling to wait for the industry headwinds to dissipate. A low threshold suggests that the offer will be declared unconditional.

• Risk pivots and action points into our late September capitulation cycle with a granular look at intraday SPX, NDX and DXY wedge patterns. DJI new low leads.
• September 27/28 cycle date with a secondary timeline in early October. Need final touches into new lows for a turn signal. 27-28 capitulation that leads to a key low.
• Impulsive yield rise fits with a blow off yield move toward 4.19% projection with DXY to 115.40 and an SPX crack to a new low (3,530 once below 3,650).

• Equity investors in countries with overvalued currencies have two ways to lose and those with undervalued currencies have two ways to win.
• Today’s strong USD looks, in the end, to be our currency and our problem.
• Keep an eye out for dangerously destructive economic policies, but don’t use that as an excuse to avoid the asset class entirely.
• The yen and euro are at their cheapest levels in decades and hedging emerging market equities would be an expensive proposition even if the currencies weren’t generally cheap versus the USD.

• Poly Real Estate Group Co., Ltd (600048 CH) sits at the edge of the inclusion zone for the FTSE China A50 Index (XIN9I INDEX) December rebalance.
• That inclusion could result in the deletion of any one of four stocks since they are all clustered within 0.7% of each other on full market cap.
• There are a few other stocks that are close to inclusion zone and a 5-10% rally in these stocks could result in more changes to the index in December.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Road King Infrastructure